Yet another trading update came at us this morning from a recommended stock, this time from Aspen. They too have been very busy for the 6 months leading up to 31 December 2012. This means that there is a significant difference between earnings per share and headline earnings per share which only includes continuing operations. There was also a dilution because 17.6 million shares were converted to ordinary shares.
If you exclude all these factors and just focus on continuing operations Aspen grew earnings by between 21% and 25%. However, you need to factor in the dilution because in essence those preference shares becoming ordinary shares is a form of compensation from the shareholders. It is a form of cost, just like salaries. That headline number will come in between 15% and 19% growth. If you include everything earnings per share will increase 5% to 9%.
Looking at the headline numbers we should expect R3.60 compared to R3.08 in this period last year. Forecasts for the full year are for around R7.80. Trading at R163 which is north of 20 times earnings the stock is definitely not cheap. But with those growth rates, huge margins and a business model which does not look like it will slow down either here in SA or around the world you can see why the stock attracts a high rating.
We will evaluate the business in more detail when the full numbers come out but we remain firm buyers of this stock.